Kohl's to sell credit card business to JPMorgan for $1.5 billion

MENOMONEE FALLS, Wis. — Kohl's Corp. said Monday that it has agreed to sell its private-label credit card business to JPMorgan Chase & Co., and that it will buy back as much as $2 billion in shares.

The purchase price for the card unit is expected to be about $1.5 billion, Kohl's said. The purchase price will be equal to the receivable balances purchased at the closing date.

Kohl's also increased its profit forecast for the fiscal year ending January 2007 to as much as $2.87 a share because it will not have to pay interest on the unit's receivables after the sale. It previously said it would earn as much as $2.85 a share. Analysts have forecast $2.80 a share.

Other retailers, including Marshall Field's owner Federated Department Stores Inc., have sold credit card units to focus on retailing. Last year, Citigroup Inc. purchased from Federated 17 million accounts for proceeds of $4.9 billion.

Kohl's will use proceeds from the sale to fund the stock repurchase and store openings. The company reiterated plans to open as many as 85 stores this year and about 500 new locations in the next five years.

Customers holding Kohl's credit cards won't be affected by the transaction, the company said. Kohl's and JPMorgan have entered into a five-year agreement under which Kohl's will continue to handle all customer service for cardholders, as well as marketing and advertising.

Chief Executive Lawrence Montgomery said the deal will provide "additional operational and marketing capabilities to support our continued growth."

The company also expects to complete its first-ever share repurchase program in the next three years, Montgomery said.

Shares of Kohl's jumped $1.73, to $50.53. JPMorgan stock fell 16 cents, to $41.43. Both trade on the New York Stock Exchange.